FY23 Local Revenue
Local revenue comprises 11.7% of the City's revenue budget in FY23, similar to its share in FY22.
Local revenue includes revenue from excise taxes, payments-in-lieu-of-taxes, licenses and permits, fees and fines, investment income, and available funds. The City is projecting $407.2 million in FY22 after registering the severity of the impacts on collections in FY21. In FY23, the budget for these sources will increase to $467.8 million, anticipating that the local economy, and economically-sensitive revenue sources with it, will build on current signs of recovery.
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Budget
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1 City Hall Square
Room 813Boston, MA 02201-2037
Overview
Local receipts, or revenue the City is able to generate locally, include items like excise taxes, fees, fines, and permits. This vital revenue source generally follows the City’s overall economic health and is projected to increase by $60.6 million or 14.9% in FY23.
Although recent economic trends are encouraging, caution remains necessary due to viral variants, geopolitical events, and macroeconomic pressures. In FY23, the Administration and Finance Cabinet will continue to work with departments Citywide to review collections, understand revenue drivers, and maximize revenue recovery efforts.
The graph to the right shows the share of each category within this revenue source.
Recurring Local Receipts by Type
FY19-FY21 are actual collections, FY22 and FY23 are budgeted amounts.
Excises
An excise tax is a tax applying to a specific industry or good.
The largest excise tax collected for the City is the local room occupancy excise, levied on occupancy of hotel rooms, motel rooms, and short-term rental units. In addition to the local tax, the State collects a 5.7% excise tax and a 2.75% fee, transferred to the State’s convention center fund, for a total tax from all sources of 14.95%.
The FY22 budget was reduced to $32.0 million in local room occupancy collections due to the dramatic economic impact COVID-19 had on travel and tourism. The FY23 budget assumes a gradual rebound in these industries, with $54.0 million in room occupancy excise as compared to over $100 million collected in FY19.
Other excise taxes that have been affected by COVID-19 and that are likewise expected to make gains in FY23 include:
- Meals - 0.75% local excise on meals
- Jet fuel tax - 5% of the average sales price, but no less than five cents per gallon
- Motor vehicle - an excise in lieu of property tax on motor vehicles, $25 per one thousand dollars of vehicle valuation
See below a table with all excise taxes the City collects.
The table below LISTS all excise taxes levied in the City:
| Categories | FY21 Actual | FY22 Budget | FY23 Budget | Difference in $$ | Difference in % |
|---|---|---|---|---|---|
| Room Occupancy | $15,562,667 | $32,000,000 | $54,000,000 | $22,000,000 | 68.8% |
| Motor Vehicle | $54,183,557 | $50,000,000 | $54,250,000 | $4,250.000 | 8.5% |
| Meals | $14,202,801 | $17,500,000 | $25,000,000 | $7,500,000 | 42.9% |
| Aircraft Fuel | $8,474,178 | $12,000,000 | $20,000,000 | $8,000,000 | 66.7% |
| Vehicle Rental Surcharge | $573,998 | $600,000 | $750,000 | $150,000 | 25.0% |
| Marijuana Excise | $0 | $1,000,000 | $1,250,000 | $250,000 | 25.0% |
| Community Host Agreements | $754,410 | $1,000,000 | $1,000,000 | $0 | 0.0% |
| Condominium Conversion | $838,000 | $500,000 | $600,000 | $100,000 | 20.0% |
| Short Term Rental | $339,780 | $500,000 | $500,000 | $0 | 0.0% |
| Boat Excise | $419 | $40,000 | $40,000 | $0 | 0.0% |
Impact of COVID-19
The increase projected in local revenue comes after these sources fell a combined $190 million, or nearly a full third, between FY19 and FY21. Even with sustained growth, it will take time to reverse such a setback.
In FY22, Boston dedicated $55 million of its American Rescue Plan Act (ARPA) State and Local Fiscal Recovery Funds (SLFRF) to replace municipal revenue lost as a result of the COVID-19 crisis. The City will decrease funding used for this purpose over time, with $40 million planned for FY23 and $20 million for FY24, as local revenue recovers. However, as the chart to the right shows, even with the addition of ARPA revenue replacement funding in FY23, the gap between expected and pre-pandemic revenue will still be over $100 million.
To learn more about the City's plans for its federal relief funds, visit the FY23 Federal Funds page.
Learn more about the Budget
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Still have questions? Contact:
Budget
-
1 City Hall Square
Room 813Boston, MA 02201-2037
